ITO, New Delhi V. M/s. Accord Overseas Pvt. Ltd., Delhi

ITA 5207/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2422 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 19-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Keywords: Reopening of assessment; Bogus purchase; Accommodation entries; Assessment record; Onus to prove
• Section: 147; 148; 153A

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SMT BEENA A PILLAI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5207/DEL/2015 (ASSESSMENT YEAR: 2006 - 07 ) ITO, WARD - 1(3), NEW DELHI VS. ACCORD OVERSEAS PVT LTD, A - 18/2, WAZIPUR INDL AREA, DELHI PAN: AABCA8860G (APPELLANT) (RESPONDENT) REVENUE BY : MS. NAINA SOIN KAPIL, SR. DR ASSESSEE BY: NONE DATE OF HEARING 31/01/ 201 9 DATE OF PRONOUNCEMENT 1 3 / 0 3/2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - I, NEW DELHI DATED 11.06.2015 FOR THE ASSESSMENT YEAR 2006 - 07. 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN QUASHING THE NOTICE U/S 148 AND THE ASSESSMENT THEREOF WHEN THE A. 0. HAD RECORDED HIS SATISFACTION AND THIS RECORDING HAD BEEN APPROVED BY THE PR. CIT AS PER PROVISIONS OF THE I. T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE PURCHASES SHOWN BY THE APPELLANT FROM M/S. HEER INTERNATIONAL AND M/S. OMAXE OVERSEAS WERE FOUND TO BE BOGUS/ NON - GENUINE AND THUS CANNOT BE CONSTRUED AS DISCLOSURE OF MATERIAL FACTS TRULY AND FULLY. 3. THE LD. C1T(A) ERRED IN RELYING ON THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN CIT VS. M/S. SUREN INTERNATIONAL PRIVATE LIMITED (ITA NO. 289/2012) & CIT VS. V INIYAS FINANCE & INVESTMENT PVT. LTD. (ITA 271/2012) WHILE QUASHING THE ASSESSMENT WHEN THE FACTS OF THE TWO CASES ARE DIFFERENT FROM THE INSTANT CASE. 3 . THE ASSESSEE IS A COMPANY WHO FILED ITS RETURN OF INCOME FOR RS. 4 1239/ AND ASSESSMENT UNDER SECTION 143 (3) WAS COMPLETED ON 7/11/2008 DETERMINING THE TOTAL INCOME OF INR 61956/ . PAGE | 2 4 . THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 BY ISSUING NOTICE U/S 148 ON 30/3/2011. THE MAIN REASON FOR REOPENING WAS THAT THAT INFORMA TION WAS RECEIVED FROM CIT (C), DELHI THAT TWO PERSONS SHRI NAVNEET JAIN AND VAIBHAV JAIN HAVE PROVIDED ACCOMMODATION ENTRIES THROUGH 37 ENTITIES CONTROLLED BY THE M WAS FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 153A IN THOSE CASES. B OTH THESE PERSONS HAVE ALSO CONFIRMED THE ABOVE FACTS. THE LEARNED ASSESSING OFFICER EXAMINED THE ASSESSMENT RECORDS AND FOUND THAT ASSESSEE HAS PURCHASED INR 8119572/ WITH THESE PERSONS CONTROLLED ENTITIES. IT WAS ALSO FOUND THAT THESE TWO PERSONS WER E ENGAGED IN GIVING BOGUS ACCOMMODATION ENTRIES AND ABOVE TWO ENTITIES ARE CONTROLLED BY THESE TWO PERSONS. THE LEARNED ASSESSING OFFICER FURTHER NOTED THAT SUCH NATURE OF THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE COMPANY HAS COME TO LIGHT ONLY AFTER TH E DETAILED INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING, DELHI AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THOSE TWO PERSONS. THE LEARNED AO FURTHER NOTED THIS TANTAMOUNT TO FRESH INFORMATION . AS THE ASSESSEE WAS FOUND TO BE THE BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES PROVIDED BY THEM . THIS ALSO REPRESENTS THE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY, WHICH HAS NOT BEEN OFFERED TO TAX BY THE ASSESSEE IN ITS RETURN FILED. THEREFORE, THE LEARNED ASSESSING OFFICER NOTED THAT I T IS A FIT CASE FOR ISSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT. IN RESPONSE TO THE NOTICE U/S 148 THE ASSESSEE COMPANY WIDE LETTER DATED 2/9/2013 SUBMITTED THAT THE ORIGINAL RETURN FILED BY THE ASSESSEE ON 11 TH /6/2006 MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE ABOVE NOTICE. THE COPY OF THE REASONS WAS ALSO HANDED OVER TO THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE COMPANY WIDE ORDER SHEET ENTRY DATED 3/9/2013. SUBSEQUENTLY THE NOTICE U/S 143 (2) OF THE ACT WAS ISSUED ON 9/10/2013. THE ASS ESSEE AGAINST THE REOPENING OF THE ASSESSMENT FILED NO OBJECTIONS . 5 . THEREFORE, ASSESSMENT PROCEEDINGS COMMENCED AND THE LEARNED ASSESSING OFFICER REQUESTED THE ASSESSEE TO FILE SEVERAL DETAILS OF PARTY WISE PURCHASES AND DETAILS IN NATURE OF PURCHASES MAD E FROM ABOUT TWO ENTITIES MENTIONED IN THE REASONS, WHICH ARE CONTROLLED BY THE ENTRY OPERATORS. THE LEARNED ASSESSING OFFICER FURTHER ISSUED NOTICES U/S 133 (6) OF THE INCOME TAX ACT TO BOTH THE PARTIES AND IT WAS FOUND THAT THERE IS NO SUCH PERSON AT TH E GIVEN PAGE | 3 ADDRESS. THEREFORE, THE LEARNED ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE ON 24/10/2013 . SUBSEQUENTLY ON 9/1/2014, THE ASSESSEE SUBMITTED THE DETAIL STATING THAT THE CASE OF THE ASSESSEE WAS ASSESSED U/S 143 (3 ) OF THE INCOME TAX, ACT AND ALL THE INFORMATION AND DETAILS WERE ALREADY SUBMITTED AT THE TIME OF ORIGINAL ASSESSMENT. IT WAS FURTHER STATED THAT THERE MAY BE A CHANCE OF CHANGE OF ADDRESS IN THE CASE OF THESE PARTIES AND THE ASSESSEE IS TRYING TO CONTACT THESE PERSONS TO G ET THE PRESENT ADDRESS. IT WAS FURTHER STATED THAT THE GOODS PURCHASED FROM THESE PARTIES ARE EXPORTED WHICH ARE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. ASSESSEE ALSO STATED THAT THE PURCHASES WERE GENUINE AND THE ASSESSEE MADE PAYMENT FOR THESE PURC HASES THROUGH ACCOUNT PAYEE CHEQUES. A COPY OF THE ACCOUNT OF THE ABOVE PARTIES ALONG WITH THE COPY OF THE BANK ACCOUNT OF THE ASSESSEE WAS PRODUCED. THE LEARNED ASSESSING OFFICER CONSIDERED THE EXPLANATION FURNISHED BY THE ASSESSEE AND STATED THAT PAYME NT FOR PURCHASES MADE THROUGH ACCOUNT PAYEE CHEQUE DOES NOT HAVE ANY WEIGHT IN VIEW OF THE INFORMATION THAT THESE ARE THE BOGUS ACCOMMODATION ENTRIES. AFTER THAT, THE ASSESSING OFFICER NOTED ABOUT THE MODUS OPERANDI OF THE ENTRY OPERATORS IN THE PRESENT C ASE AND FURTHER ISSUED A SHOW CAUSE NOTICE ON 22/1/2013. IN RESPONSE TO THAT NOTICE, NOBODY ATTENDED. THEREFORE THE LEARNED ASSESSING OFFICER REACHED TO A CONCLUSION THAT ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS TO PROVE THAT THE PURCHASES MADE DURING T HE FINANCIAL YEAR 2005 06 RELEVANT TO THE ASSESSMENT YEAR 2006 07 FROM THE ABOUT TO PARTIES ARE NOT GENUINE. THEREFORE HE HELD THAT THESE ARE BOGUS PURCHASES AND THEREFORE AN ADDITION OF INR 8 119572/ WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. TH E ASSESSMENT ORDER U/S 143 (3) SECTION 147 OF THE INCOME TAX ACT WAS PASSED ON 28/2/2014 DETERMINING TOTAL INCOME OF THE ASSESSEE AT INR 8 181528/ AGAINST THE ORIGINAL ASSESSMENT U/S 143 (3) OF THE ACT OF INR 6 1956/ . 6 . THE ASSESSEE AGGRIEVED WITH THE ORDE R OF THE LEARNED ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS 1, NEW DELHI. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER AGAINST REOPENING AS WELL AS ON THE MERITS OF THE CASE. ON THE REOPENING ASSESSEE SU BMITTED THAT AO WAS NOT JUSTIFIED IN ISSUING THE NOTICE U/S 148 OF THE INCOME TAX ACT, AS THERE WAS NO ESCAPEMENT OF INCOME TWO OF THE ASSESSEE TO PAGE | 4 DISCLOSE MATERIAL FACTS FULLY AND TRULY NECESSARY FOR THE ASSESSMENT. THE MAIN GROUND OF THE ARGUMENT OF THE ASSESSEE WAS THAT IN THE REASONS RECORDED THERE IS NO SATISFACTION ON THE PART OF THE LEARNED ASSESSING OFFICER WITH RESPECT TO THE ESCAPEMENT OF INCOME AND THERE IS NO WHISPER THAT THE APPELLANT HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N ECESSARY FOR ASSESSMENT. THE LEARNED CIT A IN PARA NUMBER 5.3.1 OF THE ORDER NOTED THAT THERE IS NO ALLEGATION IN THE REASONS RECORDED BY THE ASSESSING OFFICER THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS. HE FURTHER STATED THAT THE LEARNED ASSESSING OFFICER IS ALSO NOT MENTIONED AS TO WHETHER MR. VAIBHAV JAIN AS STATED IN THE STATEMENT THAT THEY HAVE PROVIDED ACCOMMODATION ENTRY TO THE APPELLANT ALSO THEREFORE THE LEARNED CIT A RELYING ON THE J URISDICTIONA L HIGH COURT IN CASE OF CIT VS SURREN INTERNATIONAL PRIVATE LIMITED HELD THAT THE REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 OF THE ACT IS INVALID. THE LEARNED CIT ALSO NOTED THAT THE HONOURABLE DELHI HIGH COURT IN CASE OF CIT VS VINIYAS FIN ANCE AND INVESTMENT PRIVATE LIMITED IS ALSO ON THE SIMILAR FACTS AND THEREFORE REQUIRES TO REOPENING NOTICE. HOWEVER, HE DID NOT DECIDE ON THE ISSUE OF THE ADDITION ON THE MERIT AND HELD THAT IT IS ACADEMIC IN NATURE. 7 . THE LEARNED ASSESSING OFFICER AGGRI EVED WITH THE ORDER OF THE LEARNED CIT A HAS PREFERRED AN APPEAL BEFORE US. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY STATED THAT THERE IS NO DEFECT IN THE NOTICE FOR REOPENING. HE STATED THAT THE REASONS RECORDED BY THE LEARNED ASSESSING OFFI CER PERFECTLY IN ORDER. IT WAS FURTHER MENTIONED THAT THE LEARNED ASSESSING OFFICER HAS MENTIONED THAT ASSESSEE HAS OBTAINED ACCOMMODATION ENTRY FROM TWO ACCOMMODATION ENTRY PROVIDERS. THE ASSESSEE BEFORE THE ASSESSING OFFICER HAS NOT DISCLOSED THESE FAC TS AND THEREFORE THERE IS A PERFECT FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE COMPUTATION OF THE INCOME OF THE ASSESSEE. 8 . DESPITE NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THEREFORE THIS A PPEAL IS DECIDED BASED ON THE INFORMATION AVAILABLE ON RECORD. 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ORIGINALLY THE INCOME OF THE ASSESSEE WAS ASSESSED U/S 143 (3) ON 7/11/2008. SUBSEQUENTL Y THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING THAT ASSESSEE HAS OBTAINED THE PAGE | 5 ACCOMMODATION ENTRY FROM TWO ACCOMMODATION ENTRY PROVIDERS. THE ASSESSEE HAS PURCHASED GOODS FROM TWO DIFFERENT ENTITIES, WHICH ARE OUT OF 37 ENTITIES CONTROLLED BY THE ENTRY OPERATORS. THE ASSESSEE HAS PURCHASED GOODS FROM THESE PARTIES. THEREFORE THE LEARNED ASSESSING OFFICER RECORDED THE REASONS WHEREIN IN PARAGRAPH NUMBER 4 OF THE REASONS RECORDED HAS CLEARLY MENTIONED THAT THE TRUE NATURE OF THE TRANSACTION UND ERTAKEN BY THE ASSESSEE COMPANY HAS COME TO LIGHT ONLY AFTER THE DETAILED INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF THE ENTRY OPERATORS. THEREFORE, IT IS APPARENT THAT THE LEARNED AS SESSING OFFICER HAS COME TO KNOW BECAUSE OF THE FAILURE ON THE PART OF THE ASSESSEE ABOUT THE TRUE NATURE OF THE TRANSACTION. THEREFORE, ACCORDING TO THE LEARNED ASSESSING OFFICER HAS NOTED THE FAILURE ON ACCOUNT OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y THAT THESE PURCHASES ARE FROM ACCOMMODATION ENTRY PROVIDERS. THE LEARNED CIT A HAS QUASHED THE ASSESSMENT ONLY ON THE REASON THAT THE LEARNED ASSESSING OFFICER HAS FAILED TO MENTION IN THE REASONS RECORDED THAT THE REOPENING HAS BEEN MADE ON ACCOUNT O F FAILURE ON PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE TO THE ASSESSING OFFICER THE MATERIAL FACTS OF THE COMPUTATION OF THE TOTAL INCOME. ACCORDING TO US THE LEARNED ASSESSING OFFICER HAS CLEARLY MENTIONED IN THE REASONS RECORDED, THE TRUE NATURE OF THE TRANSACTION UNDERTAKEN BY THE ASSESSEE HAS NOT BEEN DISCLOSED BY THE ASSESSEE, WHICH HAS BECOME KNOWN ONLY AFTER THE INVESTIGATION DONE BY THE INVESTIGATION WING AS WELL AS THE STATEMENT OF THE ENTRY OPERATORS. THEREFORE, IT IS APPARENT THAT THE ASSESSEE HAS ALLEGED THAT FAILURE IS ON PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY. THE LEARNED CIT A HAS RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT [2013] 35 TAXMANN.COM 398 (DELHI) COMMISSIONER OF INCOME T AX III V. SUREN INTERNATIONAL (P.) LTD. WHEREIN HONOURABLE HIGH COURT HAS RECORDED AS UNDER 15. HAVING STATED THE ABOVE, WE ARE ALSO UNABLE TO ACCEPT THE CONTENTION THAT THERE HAS BEEN FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS I N HIS RETURN AS, FIRST OF ALL, THERE IS NO SUCH ALLEGATION IN THE REASONS AS FURNISHED TO THE ASSESSEE; SECONDLY, WE CANNOT IGNORE THE FACT THAT THE ENQUIRY INTO THE SHARE APPLICATION MONEY HAD BEEN CONDUCTED IN DETAIL BY THE ASSESSING OFFICER IN THE FIRST ROUND OF ASSESSMENT. HAVING FRAMED HIS ASSESSMENT AFTER ENQUIRY INTO PAGE | 6 THE IDENTITY, GENUINENESS AND THE CREDITWORTHINESS OF THE SHARE APPLICANTS, IT WOULD NOT BE OPEN FOR THE ASSESSING OFFICER TO RE - EXAMINE THE SAME WITHOUT THERE BEING ANY MATERIAL ALLEGAT ION OF FAILURE, ON THE PART OF THE ASSESSEE, TO MAKE A FULL AND TRUE DISCLOSURE. 16. IN THE REASONS AS FURNISHED BY THE ASSESSING OFFICER, WE FIND THAT THERE IS NEITHER ANY ALLEGATION THAT THE ASSESSEE HAD FAILED TO TRULY DISCLOSE ANY MATERIAL FACTS AT THE TIME OF ASSESSMENT, NOR CAN WE READILY INFER THE SAME IN VIEW OF THE FACT THAT A DETAILED ENQUIRY HAD BEEN CONDUCTED BY THE ASSESSING OFFICER WITH REGARD TO THE IDENTITY AND CREDITWORTHINESS OF THE SHARE - APPLICANTS AND GENUINENESS OF THE TRANSACTIONS I N RELATION TO THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. FURTHER THE MERE STATEMENT THAT THE DRI HAS SEIZED CERTAIN GOODS OF THE ASSESSEE AND LEVIED A PENALTY ALSO CANNOT BE STATED TO BE A REASON FOR REOPENING OF ASSESSMENT OF THE ASSESSEE AS TH E SAID STATEMENT MADE IS NEITHER FOLLOWED BY THE RECORDING OF A BELIEF THAT THE INCOME ESCAPED ON THAT COUNT OR THAT THE ASSESSEE HAS FAILED TO DISCLOSE ALL RELEVANT MATERIAL, FULLY AND TRULY, AT THE STAGE OF THE FIRST ASSESSMENT. (UNDERLINE SUPPLIED BY US) 10 . ON READING THE REASONS RECORDED BY THE LEARNED ASSESSING OFFICER IN THE PRESENT CASE IT CAN BE READILY INFERRED THAT THE ASSESSEE HAS NOT DISCLOSE TRUE NATURE OF THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE WHICH HAS COME TO LIGHT ONLY AFTER THE DETAILE D INVESTIGATION CARRIED OUT BY THE INVESTIGATION AND DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ENTRY OPERATORS. EVEN THE LEARNED CIT A ALSO NOT VERIFIED THAT WHETHER IN THE 1 ST ROUND OF THE APPEAL THE ASSESSEE FURNISH THE RELEVA NT DETAILS AND THE LEARNED ASSESSING OFFICER IS APPLIED HIS MIND 2 THAT ARE NOT. EVEN OTHERWISE, THE DECISION RENDERED BY THE HONOURABLE DELHI HIGH COURT WAS ON DIFFERENT FACTS. FURTHER ON CAREFUL PERUSAL OF THE DECISION OF THE HONOURABLE DELHI HIGH COUR T IT CAN BE NOTED THAT IT IS NOT ALWAYS NECESSARY FOR THE ASSESSING OFFICER TO MENTION SPECIFIC WORD IN THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT ABOUT FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS THEREFORE THE DECISION RELIED UP ON BY THE LEARNED CIT A IS DISTINGUISHABLE . 11 . FURTHER ON IDENTICAL FACTS AND CIRCUMSTANCES BEYOND 4 YEARS THE HONOURABLE DELHI HIGH COURT IN [2017] 79 TAXMANN.COM 409 (DELHI) / [ 2017] 392 ITR 444 (DELHI) PRINCIPAL COMMISSIONER OF INCOME TAX VS. PARAMOUNT COMMUNICATIONS PRIVATE LIMITED HAS UPHELD THE REOPENING BEYOND 4 YEARS PAGE | 7 EVEN THOUGH THERE WAS NO MENTION IN THE REASONS RECORDED THAT ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY THE MATERIAL FACTS. AGAINST THE ABOVE DECISION, THE SPECIAL PET ITION FILED BEFORE THE HONOURABLE SUPREME COURT IS ALSO DISMISSED. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE OPINION THAT THE LEARNED CIT A HAS WRONGLY QUASHED THE REOPENING OF ASSESSMENT. ACCORDINGLY, GROUND NUMBERS 1 3 OF THE APPEAL OF THE LEARNED ASSESSING OFFICER ARE ALLOWED. 12 . APPEAL OF THE LEARNED ASSESSING OFFICER IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/3/2019 - SD/ - - SD/ - ( BEENA A PILLAI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 / 0 3 / 2019 COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI